A.
.
else
d. all of the above
.
Several adjustments have been suggested to the official budget deficit to be able to measure the
effects of the budget deficit on the economy. For which of the following would the adjusted deficit
be larger than the officia

A.
.
else
d. all of the above
.
Which of the following is true about the Federal Reserve System?
a. its seven Board members are appointed by the President of the United States
b. its main policy-making body is called the CBO
c. it insures checking account

A.
.
else
d. all of the above
.
Assume that Equilibrium GDP is $4,000 billion. Potential GDP is $5,000 billion. The marginal
propensity to consume is 4/5 (0.8). By how much and in what direction should government
purchases be changed?
a. increase by $1,00

A.
.
else
d. all of the above
.
A person had an income of $20,000 last year and paid $10,000 in tax. This year, the person
had an income of $100,000 and paid $30,000 in tax. The persons marginal tax rate is:
a. 25%
b. 30%
c. 50%
d. 100%
The tax in questio

A.
.
else
d. all of the above
.
Using the numbers in question 31, by how much should taxes be changed?
a. increased by $1,000 billion c. decreased by $200 billion
b. decreased by $1,000 billion d. decreased by $250 billion
3Assume that Equilibrium Real GD

A.
.
else
d. all of the above
.
If the official federal budget shows a deficit of $200 billion while the structural budget is has a
surplus of $200 billion, it can be concluded that:
a. the intent of fiscal policy is very expansionary
b. there is hyperinf

A.
.
else
d. all of the above
.
Which of the following statements is true about the national debt?
a. In total, it is higher now than it has ever been
b. Most of it is owed by the federal government to foreigners
c. It means that a tremendous burden is be

A.
.
else
d. all of the above
.
Which of the following is included in M-1?
a. gold
c. checkable deposits
b. credit cards
e. stock
d. money market mutual funds
Which of the following is true about the Federal Reserve System?
a. its seven Board members are

A.
.
else
d. all of the above
.
.
According to the monetarist acceleration theory, in the long-run,
a.
the actual unemployment rate will be below the natural rate of unemployment
b.
the actual unemployment rate will be equal to the natural of unemployment

A.
.
else
d. all of the above
.
.
According to the monetarists, in the long-run, the Phillips Curve is:
a. vertical
c. downward-sloping
b. horizontal
d. upward-sloping
Which of the following statements is true about supply-side economics?
a. The main chan

A.
.
else
d. all of the above
.
.
Which of the following statements is true about supply-side economics?
a. The main change made by the tax laws of 1981 and 1986 was to increase marginal tax rates in
order to balance the budget
b. The Laffer Curve says th

Consider three consumer goods: 100 of Good A, 100 of Good B, and 100 of Good C. In the base year,
Good A sold at a price of $1, Good B sold at a price of $1, and Good C sold at a price of $1. In the
current year, Good A sold at a price of $3, Good B sold

A.
.
else
d. all of the above
.
.
If the actual unemployment rate is below the natural rate of unemployment, it would be expected
that:
a. the rate of inflation would increase
b. wages would fall
c. the Phillips curve would shift to the left
d. the natura

A.
.
else
d. all of the above
.
.
Those who oppose a Constitutional amendment to require a balanced federal budget would make
which of the following arguments:
a. Deficits are bad because they can cause crowding out
b. Such an amendment could force the go

A.
.
else
d. all of the above
.
The tax in question 29 is:
a. progressive
b. regressive
c. proportional
Assume that Equilibrium GDP is $4,000 billion. Potential GDP is $5,000 billion. The marginal
propensity to consume is 4/5 (0.8). By how much and in wha

A.
.
else
d. all of the above
.
3Assume that Equilibrium Real GDP is $20,000 while Potential Real GDP is $15,000. The marginal
propensity to consume is 9/10. Assume that government decides to lower taxes by $1,000. To pay
for this, it lowers government pu

A.
. A large increase in oil prices, such as the ones occurring in 1973 and 1979, will cause
a. inflation and expansion
c. inflation and recession
b. recession and disinflation
d. expansion and deflation
. Assume that production in the United States is va

A.
. Which of the following would cause the aggregate demand curve to shift to the right?
a. an increase in purchases by the federal government
b. an increase in real interest rates
c. an appreciation of the American dollar
d. a decrease in the money supp